EU Parliamentary Committee Rejects EIB Effort to Dodge Aarhus Rules

30 November 2005

A committee of the European Union Parliament Nov. 22 rejected an effort by the European Investment Bank to be exempted from rules implementing the Aarhus Convention, the EU agreement that governs transparency policies for environmental-related activities.

Approval of an amendment by the Environment Committee to include the EIB came despite campaigning by EIB officials to have "banking" excluded from the scope of the Aarhus rules. The EIB had circulated this request last November in a "non-paper" and had won support of committee rapporteur, Finnish conservative Eija Riitta Korhola.

Magda Stoczkiewicz, Policy Coordinator of CEE Bankwatch Network, commented: "We are delighted that the Environment Committee shares our view that banking should not be exempted from Aarhus. It means that the EU’s house bank, the European Investment Bank, will need to adapt its information policy to the rules of the Regulation. It is a very welcome outcome given the fact that the EIB has been advocating for exemption from this Regulation and it should lead to the first binding law for the EIB to release information to interested citizens and people affected by EIB financed projects."

The EIB is in the process of redrafting its disclosure policies, and held a public meeting about them Nov. 18. Critics including Stoczkiewicz argued that the draft proposal lacked clarity and would permit the Luxembourg-based bank to resist many legitimate requests for documents.

General Criticism of EIB Draft Disclosure Policy

The EIB’s latest draft proposal, unveiled Oct. 21, has now drawn uniform criticism from a number of environmental, development, and freedom of information groups. The comment statements are not yet posted on the EIB website, but submissions include criticisms from CEE Bankwatch, Article 19, the African public interest group Idasa (the Institute for Democracy in South Africa) and others.

Article 19 wrote, "We cannot but express our strong disappointment with the very limited advances the new disclosure Policy makes…."

Many of those criticisms were voiced at the two-hour public session in Brussels, at which EIB officials hinted at a few possible alterations to the disclosure policy, which they expect the EIB board will approve early in 2006. Officials would not commit to putting out the final proposal that will be sent to the board, usually several weeks before it is on the board agenda.

The release of draft policies and agendas for upcoming meetings is one of many suggestions from critics at the meeting. Policies on releasing drafts vary widely among international financial institutions, but most have now adopted more open agendas. (Comparisons about different IFI disclosure policies are available with the IFI Transparency Initiative.)

Secret Projects

The debate over Aarhus and EIB came up frequently during the EIB public hearing. However, EIB officials avoided specific public comment on the Bank’s effort to obtain an exemption. One official told freedominfo.org after the meeting, however, that the key motivation was to allow the Bank to continue its practice of not disclosing all of the private sector projects while they are under consideration.

EIB officials have said such secrecy is due to the business confidentiality needs of the project promoters, and that its use is being reduced.

At an earlier meeting in Brussels on June 29, Remy Jacob, deputy secretary general of the EIB, provided new data about this practice. Jacob said that 64 percent of applications were disclosed pre-approval in 2003 and 87 percent in 2004. He predicted a 95 percent level of disclosure this year, attributing the upswing to questioning of applicants by the EIB staff about the necessity of confidentiality. "Now we ask the promoter to justify why," he said, "and he has to show it is a commercial or financial risk."

Dropping the option altogether, however, appears to be something EIB officials are unwilling to do. At the public meeting Nov. 18, one EIB official offered an example as justification. Dominique Crayencour, the head of the EIB Brussels office, told a story about a manufacturer who insisted on confidentiality about a new pollution control technology for engines, fearful that early disclosure would allow competitors to steal the idea.

Later, in a response to a request by freedominfo.org, EIB officials said Crayencour "referred to a hypothetical case of business confidentiality related to considerations of competition, without any relationship to a particular project currently under examination by the Bank. His remark was to illustrate a typical case in this area." freedominfo.org has subsequently requested a list of projects allowed to remain outside of the normal mechanism for disclosing the existence of pending projects, known as "the pipeline."

Criticisms of EIB Proposal

The topic of confidentiality came up frequently at the public hearing and in the comments sent to the EIB (not yet posted on the website). The business confidentiality exemptions proposed by the EIB offer little change from current policy and are considered by critics to be ambiguous and overly board.

"The single most serious failing" Article 19 wrote, is that the Bank’s new "presumption of disclosure" is not matched by rules that respect that presumption. The exceptions, Article 19 said, need to be tailored to allow the release of documents except in cases involving a compelling reason for non-disclosure. The EIB had suggested it would modify its policies later to comply with the Aarhus rules, but Article 19 and others urged the bank to clarify its exemptions in this round of revisions. The proposed EIB exceptions, Article 19 said, are "very significantly overbroad."

Article 19 grounded its submission on the nine principles for transparency by international organizations being developed by the Global Transparency Initiative.

Most sections of the EIB proposal attracted comment, as did its overall organization. The EIB was advised to consolidate its disclosure policy, now in four pieces, into one document. Jacob suggested that more integration was possible.

In addition to pushing for disclosure of potential projects in advance of board action, the CEE Bankwatch Network urged earlier release of the environmental and social analyses of projects and of other documents, including the staff’s ultimate evaluation, the Board Project Report. The EIB has committed to publishing the board report for public sector projects, after board consideration.

The EIB should adopt a better appeals mechanism, and release more evaluation documents, according to commentary sent to the Bank and comments at the Nov. 18 meeting.

Woven into EIB resistance to greater disclosure is a long-standing objection to being called a "development" bank. Jim Barnes, with CEE Bankwatch, urged EIB officials at the meeting to reexamine the internal perception by EIB as being just a "bank." Barnes stressed that the EIB is a "public bank" and should do more to be transparent and in a timely way.

EIB Partially Answers freedominfo.org Letter

A number of elements in the EIB draft policy remain somewhat ambiguous, including the details of the exceptions for business confidentiality, and the handling of disclosures for the "global loans" made by the EIB to private banks that in turn make loans, usually to small and medium-sized businesses.

The EIB business confidentiality exceptions indicate, among other things, intent to honor "banking sector standards," but the Bank does not refer to any particular such standards. In a Nov. 16 reply to a Nov. 7 freedominfo.org query, the EIB said it was still preparing a response on that score.

Further, the EIB said it would need more time to answer the question of whether it has the authority to mandate more disclosures by the recipients of global loans.

By Toby McIntosh
(McIntosh participated in the Brussels meeting as a representative of freedominfo.org and the Global Transparency Initiative)

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ABOUT IFTI WATCH

In this column, Washington, D.C.-based journalist Toby J. McIntosh reports on the latest developments in information disclosure in International Financial and Trade Institutions (IFTI).
Contact: freeinfo@gwu.edu or
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